Correlation Between SunOpta and Parkland Fuel

Can any of the company-specific risk be diversified away by investing in both SunOpta and Parkland Fuel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SunOpta and Parkland Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SunOpta and Parkland Fuel, you can compare the effects of market volatilities on SunOpta and Parkland Fuel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SunOpta with a short position of Parkland Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Parkland Fuel.

Diversification Opportunities for SunOpta and Parkland Fuel

0.06

Correlation Coefficient

SunOpta  Parkland Fuel

Significant diversification

The 3 months correlation between SunOpta and Parkland is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Parkland Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland Fuel and SunOpta is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SunOpta are associated (or correlated) with Parkland Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland Fuel has no effect on the direction of SunOpta i.e., SunOpta and Parkland Fuel go up and down completely randomly.

Pair Corralation between SunOpta and Parkland Fuel

Assuming the 90 days trading horizon SunOpta is expected to generate 1.74 times more return on investment than Parkland Fuel. However, SunOpta is 1.74 times more volatile than Parkland Fuel. It trades about 0.15 of its potential returns per unit of risk. Parkland Fuel is currently generating about 0.01 per unit of risk. If you would invest  872.00  in SunOpta on September 12, 2024 and sell it today you would earn a total of  251.00  from holding SunOpta or generate 28.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SunOpta  vs.  Parkland Fuel

SunOpta

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, SunOpta displayed solid returns over the last few months and may actually be approaching a breakup point.

Parkland Fuel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parkland Fuel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Parkland Fuel is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SunOpta and Parkland Fuel

The main advantage of trading using opposite SunOpta and Parkland Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Parkland Fuel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Parkland Fuel will offset losses from the drop in Parkland Fuel's long position.

The idea behind SunOpta and Parkland Fuel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.